Despite a strong rebound in oil prices, seeing them hit three-year highs, U.S. shale oil producers are sticking to their output discipline, Reuters reports, citing rig count data and industry insiders.
While West Texas Intermediate has passed the $70-per-barrel mark that makes a lot more shale output profitable, producers are wary of bringing back too much production too quickly.
Reuters notes in its report that the last time WTI traded at $73 per barrel, there were more than 1,000 active drilling rigs in the shale patch. To date, there are some 470.
Production also fluctuates. Last week, the Energy Information Administration estimated total national output of 11.1 million bpd for the week to June 18. That was down by 100,000 bpd from the previous week. It was also just 100,000 bpd higher than output for the same week a year ago, at the height of the pandemic crisis.
Shale output this month has averaged 7.77 million bpd, down from a high of 9.18 million bpd in January last year. First-quarter output, according to Reuters, has been at 83 percent of last year’s peak.
What’s more, there is little chance of this changing even as prices are expected to continue climbing higher. The chief executive of Pioneer Natural Resources, Scott Sheffield, told Reuters he did not see shale oil producers adding more rigs even if prices rose closer to $80 a barrel. In fact, Pioneer may even reduce the number of rigs it uses to drill new wells thanks to improving efficiencies.
Yet, there is also caution about OPEC+. The cartel is considering adding more of its own output to global supply in the next two months, and this may slow down the climb of oil prices.
By Irina Slav for Oilprice.com
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